Malacañang denies ‘sweetheart deal’ in Maynilad settlement

Malacañang called on the political opposition to stop casting doubts on a settlement reached between the government and Maynilad Water Services, insisting no backroom deals were made.

Maynilad hammered out a compromise last week with government regulator Metropolitan Waterworks and Sewerage System (MWSS) allowing the Lopez-run utility to return to the government the responsibility of providing water to over half of Metro Manila.

The agreement was necessary to ensure uninterrupted water supply, Presidential Spokesman Ignacio Bunye said.

"We call on the opposition to spare this issue from politicking and instead support the government’s move for the common good of water consumers in Metro Manila," he said in a statement released by Malacañang.

"We cannot just sit and shrug off an imminent crisis threatening the water service in major parts of the metropolis," Bunye said.

The Koalisyon ng Nagkakaisang Pilipino (KNP) claims the compromise settlement was a "sweetheart deal" with the influential Lopez clan in exchange for convincing Sen. Noli de Castro to run as President Arroyo’s vice presidential running mate in the May polls, a charge Malacañang denies.

De Castro was formerly a radio and television news anchor with the Lopez-run ABS-CBN Broadcasting Corp.

Because of the compromise, the MWSS will get $50 million in cash up front from Maynilad and concession fees of P5.5 million a month, said Justice Undersecretary Manuel Teehankee, the government’s corporate counsel who led negotiations with Maynilad.

KNP senatorial candidate Juan Ponce Enrile said Mrs. Arroyo was "pandering to the Lopezes so that she will get the support of ABS-CBN to bail her out politically."

"The quid pro quo is that you help me out with my political difficulties so that I can be elected president and I will bail you out of your financial predicaments," he said.

"Why should the government buy into a bankrupt company? There is no question that this is a concession to the Lopezes because, if they’re not bailed out, they will have to shell out their own money — including maybe ABS-CBN — in order to pay their obligations."

Rejecting claims that he was involved in the settlement, de Castro said Maynilad, the MWSS and the Office of the Government Corporate Counsel to explain the agreement in detail to the public to avoid misconceptions.

"I am a public servant. I am not the spokesman of Maynilad nor do I represent and work its interest. I am not in any way privy to the government-Maynilad agreement," he said. "But this is sure, my stand on this issue will always be in favor of the consumers who are entitled to clean, potable and affordable water."

Maynilad company won the 25-year concession from MWSS in August 1997. Aside from supplying water, it was also required to modernize, improve and expand the city’s antiquated water system in that period.

Maynilad’s concession was hailed as a landmark in the government’s efforts to privatize more of its utilities and to improve vital services. Maynilad’s troubles began in 1997 when the Asian financial crisis hit and the foreign exchange rate soared, raising Maynilad’s debts from P20 billion to P40 billion.

Maynilad terminated its concession contract in 2002, complaining the government failed to honor its commitments, particularly to raise water rates so the utility could pay its financial obligations and stay in operation.

The government disputed Maynilad’s complaints, prompting both sides to seek international arbitration. The panel of arbiters suggested that both sides reach a settlement to prevent the issue from dragging on. — With Jose Rodel Clapano, Paolo Romero, Sheila Crisostomo